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OCC Puts Empire District Rate Hike on Hold

October 19, 2016 By Cheryl Kaften

A short amnesty from a massive, $4.7 million rate hike has been granted by the Oklahoma Corporation Commission (Cause No. PUD 201500379) to 4,600 Empire District Electric customers who live near the Missouri state border – and, therefore, are served by the Show Me State power company.

Order No. 656890, issued on October 13 by the commission, rejected “Empire’s Missouri rates and charges as filed in this cause, determining that additional hearings are required” pursuant to Oklahoma Corporation Commission Chapter 5 Rules of Practice. The commission directed the parties to establish a procedural schedule for the hearings.

The Oklahoma Corporation Commission pegged the proposed rate hike at $42.62. What’s more, the commission believes, the average commercial customer would pay $34.19 more every month; and the typical industrial customer would see a whopping $21,545 extra on the bottom line.

Empire has made over $670 million in capital improvements to serve customers since 2011, according to the utility, which made its case for the rate hike. Some of those improvements in Oklahoma include a multi-year, multi-million-dollar upgrade project in Welch that involved replacing 27 miles of electrical transmission line; as well as rebuilding and system hardening related to a tornado that hit Quapaw, a town of 900 residents about 20 miles southwest of Joplin Missouri, in April 2014.

OCC spokesperson Matt Skinner told the Miami News-Record of Miami, Oklahoma, that he could not speak directly about the proposed Empire case for the biggest part, but could give information about the rate case hearing process in general.

“This is still a pending case,” Skinner said. “What happened … was another step on the road to begin this case. The commission denied Empire’s application to have treatment under a rule, which would have allowed the imposition of Missouri’s rates for Empire customers. The idea behind the Oklahoma rule was efficiency, but it still has consumer protections in it.”

“We’ve been working with the commission staff and the other parties to the case to develop a procedural schedule and establish a process to move forward with new rates for Oklahoma customers so while they decided against applying the Missouri rates in Oklahoma, there was a rule in place that allowed us to file and request that,” Empire’s Director of Corporate Communications Julie Maus told the local news outlet.

“So, that is what we did versus incurring the costs associated with conducting a full Oklahoma rate case – that was the thought process behind that, to save some cost there for customers in terms of rates case expense,” Maus added. “They did reject that filing and so what we are doing now is working with the commission staff to determine the process going forward in probably an abbreviated rate case process, because we still need to move forward with new rates for Oklahoma customers. It’s been several years since that has taken place and we still need to begin recovery of the costs that we have incurred for all of the improvements that have been made to the system.”

Empire is based in Joplin and is an investor-owned, regulated utility providing electric, natural gas (through its wholly owned subsidiary The Empire District Gas Company), and water service. Empire serves approximately 218,000 customers in Missouri, Kansas, Oklahoma and Arkansas.

Oklahoma customers make up 2.7 percent of its entire customer base.

OCC rules provide that, when an electric company serves less than 10 percent of its total customers in the state, the Oklahoma customers can be prescribed the same rates as the adjacent state, the newspaper said.

“We probably needed to do a little better job communicating this information to our customers in Oklahoma prior to this filing,” Maus said. “We have had some historic expenses with the environmental mandates that we have had to meet from the Environmental Protection Agency.”

Oklahoma Empire energy users who would be impacted –including business leaders, school districts, and residents – met with Oklahoma Industrial Energy Consumers Attorney (OIEC) Tom Schroedter for a round table discussion regarding the proposal.

Once the timeline is established, OIEC is asking Empire business customers to join in as parties to the rate hearing, the Miami News-Record reported.

The Oklahoma Corporation Commission had until October 24 to determine if additional hearings were required to either accept or reject the rate increase. Empire has revealed that the utility is not opposed to a phase-in of new rates.

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